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10 years c. Aiman is considering investing in corporate bonds. The following are the relevant data for him to evaluate: Shah Bond Alam Bond Coupon

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10 years c. Aiman is considering investing in corporate bonds. The following are the relevant data for him to evaluate: Shah Bond Alam Bond Coupon rate 12% per annum 12% per annum Maturity date 8 years Market interest rate 16% per annum 8% per annum Annually compounded Semiannually compounded Par vale RM1,000 RM1,000 Market price RM936 RM1,190 Calculate the maximum price Aiman should pay for each bond? If the market price of each bond is as stated above, which bond should he buy? Explain why? From your answers above draw a diagram showing the relationship of the bonds prices and the interest rate (15 marks)

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